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Who needs to complete an income tax return?

Short Answer

If HMRC ask you to complete an income tax return then you must!

Reasons for completing an income tax return

In most cases, if you are in full time employment and have no other income you will not need to complete an income tax return because all your income tax will be collected through the PAYE system. That covers most people in the country but not the self-employed.

If any of the following apply then you DO need to complete an income tax return:

  • – You have untaxed income from dividends, self-employment or property
  • – You are a company Director *
  • – Your income (or your partner’s) was over £50,000 and one of you claimed Child Benefit
  • – Your income is greater than £100,000
  • – HMRC ask you to complete one

* The Company Director point is an interesting one. There is no law saying Company Directors need to complete an income tax return, this is purely a HMRC policy. If you are a Company Director but none of the other points apply then you should not be penalised for not completing a return.


Telling HMRC that no income tax return is due

It’s possible that HMRC believe you are required to complete an income tax return when in fact you are not. If this is the case they will send out a notice to complete an income tax return around April or May.

If this happens you must do something, you will be fined if you do not complete a return and do not explain to HMRC why no return is necessary.

The easiest approach will be to phone HMRC on 0300 200 3310 and request that they withdraw the request for an income tax return giving the reason why.


Telling HMRC that you need to complete a tax return

You should not assume that HMRC knows if you need to complete a return. It is up to you to tell them if you need one and there can be fines for not telling them, if you don’t tell them and there is tax due it is tax fraud!

To get into the income tax system you just need to complete the form here. Once you submit that form HMRC will send you a letter confirming your registration and providing your unique tax reference (UTR).